TORONTO, Nov. 12, 2024 (GLOBE NEWSWIRE) -- Martinrea International Inc. (TSX : MRE), a diversified and global automotive supplier engaged in the design, development and manufacturing of highly engineered, value-added Lightweight Structures and Propulsion Systems, today announced the release of its financial results for the third quarter ended September 30, 2024, and declared a quarterly cash dividend of $0.05 per share.
HIGHLIGHTS
- Third quarter total sales of $1,237.5 million, production sales of $1,167.3 million.
- Third quarter Adjusted EBITDA(1) of $154.1 million, 12.5% of total sales.
- Third quarter Operating Income Margin of 5.3%; Adjusted Operating Income Margin(1) was 5.9% for the nine months ended September 30, 2024.
- Third quarter Free Cash Flow(1) (excluding principal payments of IFRS-16 lease liabilities) was $57.0 million; Free Cash Flow(1) was $107.4 million for the nine months ended September 30, 2024, a notable improvement over $75.5 million generated in the nine months ended September 30, 2023.
- Third quarter diluted net earnings per share of $0.19 or $0.44 per share at a normalized effective tax rate after adjusting for unusual foreign exchange movements between the Mexican Peso against the U.S. dollar. These foreign exchange movements are non-cash in nature, do not impact cash taxes and tend to balance out over time (refer to "Overall Results” section for further details).
- Net Debt-to-Adjusted EBITDA(1) ratio, excluding the impact of IFRS 16, ended the third quarter at 1.46x.
- New business awards of approximately $35 million in annualized sales at mature volumes.
- Quarterly cash dividend of $0.05 per share declared.
Pat D'Eramo, Chief Executive Officer, stated: "Our third quarter financial results were solid, and met our internal expectations based on the lower level of industry production volumes in the quarter. Our Free Cash Flow(1) was strong, and our Adjusted EBITDA(1) was solid, with Adjusted EBITDA Margin(1) up year over year. Operationally, we are executing well. We continue to drive efficiency gains and cost savings through our Martinrea Operating System. In addition, we continue to make good progress in commercial negotiations with our customers, obtaining compensation for volume shortfalls on electric vehicle programs and lingering inflationary costs. We are experiencing some further production volume shortfalls in the fourth quarter as OEMs adjust inventories on a number of platforms, some of which are big programs for us. We have been impacted by OEM production shutdowns, often with little to no advance warning, which makes it challenging to properly flex costs. The impact is being felt across all powertrain types, not just electric vehicles. While this will impact our financial performance in the fourth quarter, we expect production volumes to improve beginning in the first quarter of 2025, as inventories adjust. Interest rates, which are coming down in both the U.S. and Canada, with further cuts expected, should help to improve vehicle affordability, which in turn, should lead to higher sales for suppliers.”
He continued: "I am pleased to announce that we have been awarded new business representing $35 million in annualized sales at mature volumes, consisting of $30 million in Lightweight Structures with multiple customers including International Motors (formerly Navistar), BMW, and Nissan, and $5 million in Propulsion Systems, with Audi.”
Peter Cirulis, Chief Financial Officer, stated: "We are pleased with our financial performance in the third quarter. We are driving a healthy level of Free Cash Flow(1) from the business, and our balance sheet is in great shape. Sales for the third quarter, excluding tooling sales of $70.2 million, were $1,167.3 million. Third quarter Adjusted EBITDA was $154.1 million, and Adjusted EBITDA Margin of 12.5% was up 60 basis points year over year. Free Cash Flow(1) (excluding principal payments of IFRS-16 lease liabilities) was $57.0 million in the third quarter, and $107.4 million on a year-to-date basis, a big improvement over the $75.5 million generated in the comparable 2023 period, driven in part by lower capex. On a full year basis, we project that we will come in at the high end of our 2024 Free Cash Flow(1) outlook range of $100 million to $150 million, excluding lease payments, and potentially even better.”
He continued: "Net Debt(1) (excluding IFRS-16 lease liabilities) declined by approximately $32 million quarter over quarter, to $820.1 million, reflecting the Free Cash Flow(1) profile for the quarter. Approximately $9.5 million was spent during the quarter, repurchasing approximately 826,000 shares through our normal course issuer bid. Our-Net-Debt-to-Adjusted EBITDA(1) ratio (excluding the impact of IFRS 16) ended the quarter at 1.46x, in line with our target leverage ratio of 1.5x or better.”
Rob Wildeboer, Executive Chairman, stated: "We are executing well operationally and financially, and allocating capital with a view to maximizing returns for our stakeholders. We have previously mentioned that capital allocation would be balanced between share buybacks and debt reduction. Both are important priorities for us, and we have demonstrated disciplined execution on both fronts, including during the third quarter. In the past year and a half, since our net debt hit an all-time high of $956 million, we have paid down $136 million in debt, repurchased 6.5 million common shares, equal to 8% of shares outstanding, and reduced our Net-Debt-to-Adjusted EBITDA(1) ratio from 1.90x to 1.46x. We believe consistent Free Cash Flow(1) generation is the path to a higher valuation. On behalf of the executive management team, we would like to thank our people for their hard work in delivering a solid quarterly performance, as well as our shareholders and other stakeholders for their continued support.”
RESULTS OF OPERATIONS
All amounts in this press release are in Canadian dollars, unless otherwise stated; and all tabular amounts are in thousands of Canadian dollars, except earnings per share and number of shares.
Additional information about the Company, including the Company's Management Discussion and Analysis of Operating Results and Financial Position for the three and nine months ended September 30, 2024 ("MD&A”), the Company's interim condensed consolidated financial statements for the three and nine months ended September 30, 2024 (the "interim financial statements”) and the Company's Annual Information Form for the year ended December 31, 2023 can be found at www.sedarplus.ca.
OVERALL RESULTS
Results of operations may include certain items which have been separately disclosed, where appropriate, in order to provide a clear assessment of the underlying Company results. In addition to IFRS measures, management uses non-IFRS measures in the Company's disclosures that it believes provide the most appropriate basis on which to evaluate the Company's results.
The following tables set out certain highlights of the Company's performance for the three and nine months ended September 30, 2024 and 2023. Refer to the Company's interim financial statements for the three and nine months ended September 30, 2024 for a detailed account of the Company's performance for the periods presented in the tables below.
| Three months ended September 30, 2024 | Three months ended September 30, 2023 | $ Change | % Change | ||||||||||
| Sales | $ | 1,237,493 | $ | 1,378,938 | (141,445 | ) | (10.3 | %) | |||||
| Gross Margin | 163,350 | 181,194 | (17,844 | ) | (9.8 | %) | |||||||
| Operating Income | 65,879 | 83,015 | (17,136 | ) | (20.6 | %) | |||||||
| Net Income for the period | 14,157 | 53,744 | (39,587 | ) | (73.7 | %) | |||||||
| Net Earnings per Share - Basic and Diluted | $ | 0.19 | $ | 0.68 | (0.49 | ) | (72.1 | %) | |||||
| Non-IFRS Measures** | |||||||||||||
| Adjusted Operating Income | $ | 65,879 | $ | 83,015 | (17,136 | ) | (20.6 | %) | |||||
| % of Sales | 5.3 | % | 6.0 | % | |||||||||
| Adjusted EBITDA | 154,129 | 163,482 | (9,353 | ) | (5.7 | %) | |||||||
| % of Sales | 12.5 | % | 11.9 | % | |||||||||
| Adjusted Net Income* | 14,157 | 53,744 | (39,587 | ) | (73.7 | %) | |||||||
| Adjusted Net Earnings per Share - Basic and Diluted* | $ | 0.19 | $ | 0.68 | (0.49 | ) | (72.1 | %) | |||||
| Nine months ended September 30, 2024 | Nine months ended September 30, 2023 | $ Change | % Change | ||||||||||
| Sales | $ | 3,863,199 | $ | 4,043,882 | (180,683 | ) | (4.5 | %) | |||||
| Gross Margin | 519,517 | 522,169 | (2,652 | ) | (0.5 | %) | |||||||
| Operating Income | 215,019 | 240,628 | (25,609 | ) | (10.6 | %) | |||||||
| Net Income for the period | 98,786 | 151,815 | (53,029 | ) | (34.9 | %) | |||||||
| Net Earnings per Share - Basic and Diluted | $ | 1.30 | $ | 1.90 | (0.60 | ) | (31.6 | %) | |||||
| Non-IFRS Measures** | |||||||||||||
| Adjusted Operating Income | $ | 226,629 | $ | 240,628 | (13,999 | ) | (5.8 | %) | |||||
| % of Sales | 5.9 | % | 6.0 | % | |||||||||
| Adjusted EBITDA | 483,098 | 476,598 | 6,500 | 1.4 | % | ||||||||
| % of Sales | 12.5 | % | 11.8 | % | |||||||||
| Adjusted Net Income* | 106,637 | 147,241 | (40,604 | ) | (27.6 | %) | |||||||
| Adjusted Net Earnings per Share - Basic and Diluted* | $ | 1.40 | $ | 1.84 | (0.44 | ) | (23.9 | %) | |||||
**Non-IFRS Measures
The Company prepares its interim financial statements in accordance with IFRS. However, the Company considers certain non-IFRS financial measures as useful additional information in measuring the financial performance and condition of the Company. These measures, which the Company believes are widely used by investors, securities analysts and other interested parties in evaluating the Company's performance, do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to financial measures determined in accordance with IFRS. Non-IFRS measures include "Adjusted Net Income”, "Adjusted Net Earnings per Share (on a basic and diluted basis)”, "Adjusted Operating Income”, "Adjusted EBITDA”, "Free Cash Flow”, "Free Cash Flow (after IFRS 16 lease payments)", and "Net Debt”.
The following tables provide a reconciliation of IFRS "Net Income” to Non-IFRS "Adjusted Net Income”, "Adjusted Operating Income” and "Adjusted EBITDA”:
| Three months ended September 30, 2024 | Three months ended September 30, 2023 | ||||
| Net Income | $ | 14,157 | $ | 53,744 | |
| Adjustments, after tax* | - | - | |||
| Adjusted Net Income | $ | 14,157 | $ | 53,744 | |
| Nine months ended September 30, 2024 | Nine months ended September 30, 2023 | |||||
| Net Income | $ | 98,786 | $ | 151,815 | ||
| Adjustments, after tax* | 7,851 | (4,574 | ) | |||
| Adjusted Net Income | $ | 106,637 | $ | 147,241 | ||
| Three months ended September 30, 2024 | Three months ended
September 30, 2023 | ||||||
| Net Income | $ | 14,157 | $ | 53,744 | |||
| Income tax expense | 33,276 | 14,713 | |||||
| Other finance income | (1,084 | ) | (7,418 | ) | |||
| Share of loss of equity investments | 690 | 600 | |||||
| Finance expense | 18,840 | 21,376 | |||||
| Adjustments, before tax* | - | - | |||||
| Adjusted Operating Income | $ | 65,879 | $ | 83,015 | |||
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